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How well is NZ’s consumer confidence faring?

Consumer confidence is important to the success of the real estate industry for many different reasons. After all, if people are optimistic about what the future has in store, they’re more likely to feel in a better position to make big-ticket purchases such as property.

Kiwis’ sentiment has experienced its fair share of ups and downs lately, but how is it faring as 2015 comes to an end? Several leading indicators have shed their own light on the situation, which might give some insight into how the property market will fare as we enter 2016.

Easing back from November levels

The ANZ-Roy Morgan NZ Consumer Confidence Index reached a six-month high in November, but has started to fall back to its historical average in December.

Results showed a net six per cent of people now feel more financially secure than they did 12 months ago, while 38 per cent believe now is a good time to buy a major household item. Consumers are also buoyed by the prospect of the festive period, and the start of a new year might give them an incentive to move out of rental properties into homes of their own.

Although consumers are more caution, ANZ and Roy Morgan indicated that this shouldn’t been seen as a negative sign. The results suggest this is likely to be a temporary issue, especially as “borrow-and-spend style growth” returns to the fore.

Optimism remains

There is also greater reason for optimism, as indicated by consumer confidence readings from the Westpac: McDermott Miller New Zealand Consumer Confidence Index for the September quarter. The research showed that sentiment is declining, but this is mainly linked to concerns about the wider economy.

Of those polled, 15 per cent now believe the economy will encounter bad times over the next 12 months. This is primarily as result of low dairy prices and problems with government policy, both of which have the potential to shift over the coming year.

Richard Miller, managing director in strategy and economics consultancy at McDermott Miller, said the results nevertheless suggest that “consumers remain optimistic”. The significant drop witnessed over the three months to September is likely to be a knee-jerk reaction to some of the economic turmoil the country has faced.

It’s not only New Zealand that has witnessed this level of disruption, either. The third quarter Asia-Pacific survey from Nielsen showed confidence declined in eight out of the 14 nations in this part of the world.

Nevertheless, global consumer confidence marked a three percentage point rise, while immediate spending intentions increased to a high of 43 per cent over the three-month period.